CONFIDENTIAL
ACTION
Mr Havelock
MEE4
11 Following a brief discussion of the US difficulties in exporting directly to China, Mr Uden said that, while relations with the US on nuclear matters were vital and generally good, he felt that the FCO would not be too concerned if the UK renounced the US option. The delay in replying to the UK request for approval of nuclear exports to China was not satisfactory, and a withdrawal from the US option might be a salutary lesson for the Americans in maintaining relations with allies. On the Anglo-French option, Mr Uden said that French involvement in the nuclear island was to be welcomed, since the French would be responsible for obtaining non-proliferation assurances from the Chinese. Mr Manzie said that this, the lower ECGD risk involved, and French assumption of the liabilities and risks associated with project leadership, were all strong points in support of the Anglo- French option. Mr Moss asked that the possibility of BNFL sharing the fuel contracts be pursued with the French, and Mr Havelock said that while this was for negotiation with the French, he felt that there was still a chance of securing BNFL participation in the project.
12 Mr Manzie felt that it would be sensible for Mr Manley of Department of Energy and himself to talk to Sir Walter Marshall at some point. Mr Moss agreed that early consultation was desirable in view of Sir Walter's influence with the Prime Minister. Following a brief discussion, it was agreed that:
i)
ii)
MEE4 and Strategy Group
iii)
Mr Manzie
iv)
MEE4
13
DOI would respond favourably to the French request for a meeting and would arrange a meeting in London as soon as possible. The context of the meeting would be an exchange of views on the situation following the PM's visit to China and the Sino-French Joint Economic Commission.
The UK side would tell the French that UK policy was still to keep both options open, but that, in view of the messages from the Chinese, we wanted to take discussions on an Anglo- French option further, ie what was the French attitude to a joint GEC/Franatone bid be? No commitment could be undertaken at this meeting, which it was hoped that M Warin (Mr Manzie's opposite number) would attend.
Following the meeting with the French a draft note from SOS(I) to the Prime Minister would be circulated for submission as soon as possible.
Mr Manzie would speak to Mr Manley to discuss the timing and content of a joint approach to Sir Walter Marshall.
Mr Hanzie said that in discussions with the French the question of financial terms and the project viability must be mentioned, and Mr Havelock said that further analysis of the computer runs of economic viability from CLP would be necessary. Mr Sedman indicated that viability was important to ECGD's underwriting assessment of the risks, and a clear offtake agreement from CLP was essential. The French in their bilateral meeting with ECGD had taken a tight line on finance, and he believed they would maintain this with the Chinese. Although aid might be one way of reducing the effective interest rate, the French had said they were definitely not considering an aid input into the finance package.